The Budget outlined measures aimed at getting over 50s back to work, but failed to mention the support needed for those whose pension plans have been affected by the cost of living crisis to decide their futures, argues pensions expert Lily Megson.
The first few months of 2023 were dominated by headlines focused on the UK’s ‘economic inactivity’ crisis and the Government’s intentions to remedy this by coaxing over-50s back into the workforce, as well as encouraging those who are currently employed to remain.
Over the past couple of years, changes in employment patterns, accentuated by the Covid-19 pandemic, have led to significantly higher numbers of over-50s leaving the workforce. According to ONS figures, the number of economically inactive persons aged 50 to 64 in the May to July 2022 period was than it was during the immediate pre-pandemic period.
Accordingly, much of the changes outlined in the Government’s March Spring Budget centred on pension policy and initiatives to bring this group back into the workforce. However, what these efforts failed to consider, is the support needed for those whose retirement plans have been affected by the cost-of-living crisis.
As the headlines move on from ‘economically inactive’ over-50s, inflation, currently sat at , continues to eat away at the hard-earned savings in Britons’ pension pots. In turn, over a quarter (26%) of over-55s in work think they will still be working in their 70s, while 44% say the cost-of-living crisis has made retirement impossible, according to recent My Pension Expert .
Of course, retirement is a key factor for economic inactivity among older groups (aged 60-64). Meanwhile, those are more likely to have left work due to stress or not feeling supported in their job. Indeed, shows that 48% of workers aged 40 and above are considering retiring because they are fed up with their job – 51% said they need to be valued more, and 43% said they need higher pay.
Furthermore, older workers often face more barriers based on biases and assumptions about their skills, competencies and motivations. These prejudices can lead to a lack of support for their training and development, which can hinder their progress and decrease their overall job satisfaction.
And while the Government has sought to address this via funding for skill bootcamps, it’s important that they understand two things. Firstly, money is not the sole motivational factor for work. Unless people feel appreciated and receive support in team integration, those who choose to return to work may find themselves leaving work once more rather swiftly.
Secondly, deciding whether to stay in work or retire should be a choice consumers feel empowered to make without external pressures.
Many have had his decision taken away from them as a year of high inflation rates has gradually chipped away at their pension pot. As such, thousands of Britons’ have had to return to work to make up for their losses.
Despite this, the previously mentioned My Pension Expert found that only 17% of over-55s currently use the services of a financial adviser, with 55% believing that it’s too expensive – highlighting a disconnect between the need for financial services and the uptake.
This underlines an urgent need to improve pension engagement and access to independent financial advice, which are vital resources for pension planners to prepare for a secure and sustainable retirement with a customised plan that fits their circumstances.
As individuals approach retirement age, they face critical decisions about their financial future, but many are left without the necessary information and guidance to make informed choices. The Government ought to focus more on supporting these people whose financial plans are being heavily disrupted rather than finding ways to incentivise longer working lives. Consulting with an independent financial adviser can provide them with the insights they need to understand their financial planning and keep retirement on track.
Therefore, increasing public awareness of and access to independent expert advice must be a top Government priority. By closely collaborating with the financial services industry, both sides can cooperate to build a system where people can choose their own retirement date – and be able to stick to it. We can only achieve broad retirement financial stability once everyone has access to the resources and advice necessary to make informed decisions. In turn, this can provide Britons with the power to retire on their own terms after years of planning and hard work.
*Lily Megson is the Policy Director of My Pension Expert, the UK’s number one advised retirement income specialist (as rated on ). Founded in 2010, FCA-regulated My Pension Expert specialises in providing independent advice to UK consumers about their pension plans – it arranges millions of pounds worth of retirement income options each week. The company is entered on the FCA Register № 579999.